HOUSTON - (Business Wire) Chevron’s annual shareholder meeting erupted in chaos today after CEO John Watson received a stern rebuke from shareholders for its Ecuador environmental disaster and a 71-year-old Ecuadorian woman said the company was responsible for an environmental atrocity in the rainforest that cost her two children and was devastating the lives of thousands of people.

Chevron’s management also seemed to panic during the meeting when they summoned the Houston police to arrest noted author and Chevron critic Antonia Juhasz when she confronted Watson over Chevron’s environmental record. Four other individuals – all well-known critics of the company – also were also arrested when they were refused entry despite having proxies from shareholders.

“Chevron’s [CEO] Watson lost control of the meeting and it degenerated into chaos and ended abruptly,” said Maria Ramos, an organizer with the Rainforest Action Network, a San Francisco-based group that has been campaigning against the company. “It was obvious that Watson has very thin skin when it comes to Chevron’s critics.”

In all, only seven of the 27 persons with proxies that were brought by the environmental groups were allowed to enter the meeting – possibly an “illegal act” that violates SEC regulations, said Ramos. Chevron selectively enforced various proxy rules to keep critics out of the meeting, Ramos said.

“Chevron was smarting for a confrontation today and then lost its head when it happened,” said Ramos.

Others arrested were Mitch Anderson, the lead campaign coordinator against Chevron for Amazon Watch; Han Shan, also a leading Chevron critic who works with Amazon Watch; the Rev. Kenneth David from Richmond, California, the site of a Chevron refinery that local residents say causes pollution; and Juan Parras, a Houston-based organizer who has confronted Chevron over pollution at its refineries in Texas.

Chevron’s management team also suffered a humiliating rebuke when shareholders supported a resolution stemming from the Ecuador problem with a whopping 26% of the vote representing approximately $38 billion in shareholder value. (Generally, any shareholder resolution that receives 10% support is considered a success given the opposition of management.)

The resolution, which called for the company to appoint a director with environmental expertise, was co-sponsored by the Pennsylvania State Treasury, Trillium Asset Management Corporation, and Amnesty International USA. Risk Metrics, an influential investment advisory group, advised shareholders to support the resolution.

Marianna Jimenez, a 71-year-old grandmother from Ecuador, stood up during the meeting and said Chevron’s pollution had caused the deaths of two of her children. She told Watson: “I want you to take responsibility for this crime that your company has committed in my country.”

Watson also received a direct challenge from Ramos in the meeting when he was nominated to join Chevron’s Board. Watson was the Chevron executive with lead responsibility for integrating Texaco into the company in 2001.

“A particular important question for shareholders is whether Watson, as architect of the merger, adequately vetted Texaco before purchasing the company for $31 billion – a sum only $4 billion more than its current exposure in the Ecuador lawsuit,” said Ramos. Watson responded by saying Chevron had been “richly rewarded” by its acquisition of Texaco.

Speaking in front of Chevron’s Houston headquarters before the meeting, Ecuadorian indigenous leaders demanded that Watson stop hiding the disaster that Chevron’s operations have caused in Ecuador. Guillermo Grefa, from the Kichwa tribe, said: “We must not allow Chevron to continue lying to us about its contamination in the Amazon.”

Chevron has admitted to dumping at least 15 billion gallons of toxic “produced water” into the region’s water supply when it operated an oil concession in Ecuador between 1964 and 1990. It also abandoned more than 900 unlined waste pits, causing an outbreak of cancer and the decimation of indigenous groups, according to evidence in trial.

“Mountains of evidence in the trial prove what the people of the Ecuadorian Amazon already know; that Chevron is guilty of massive toxic contamination in Ecuador,” said Shan before his arrest. “Instead of taking responsibility, Chevron is weaving an ever more complex web of deception and deceit, and it’s time for Chevron’s Board of Directors to put an end to it.”

Chevron General Counsel Hewitt Pate also has come under fire for making false statements designed to mislead shareholders about the trial process in Ecuador. Pate, a Deputy Attorney General in the Bush administration, has been criticized for not adequately disclosing the company’s risks in Ecuador to shareholders – a fact which prompted an inquiry into Chevron’s public disclosures last year from the New York Attorney General.

At last year’s annual Chevron meeting, a resolution relating to Ecuador that asked the company to adopt a “verifiable” human rights policy garnered a remarkable $37 billion in voting shares out of the $133 billion outstanding.

“The entire issue of corporate compliance with human rights norms is trending heavily against Chevron, which is falling behind most of its peers in this area,” said Ramos.